FTC Chair Lina Khan testifies during the House Appropriations Subcommittee on Financial Services and General Government hearing titled “Fiscal Year 2025 Request for the Federal Trade Commission,” in Rayburn Building on Wednesday, May 15, 2024.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
The Federal Trade Commission is planning to sue three major U.S. healthcare companies over their practices as middlemen negotiating prices for drugs such as insulin, which the agency argues inflate costs for patients, a source familiar with the matter told CNBC on Wednesday.
The lawsuits are expected to target the three largest pharmacy benefit managers, UnitedHealth GroupThe Optum Rx of CVS HealthCaremark by and CignaExpress Scripts, the source said, confirming an earlier Wall Street Journal report on Wednesday about the agency's plans. All three are owned or related to health insurers.
The lawsuits will focus specifically on business practices related to rebates that PBMs negotiate with drugmakers, the Journal reported, citing sources familiar with the matter.
A CVS Caremark spokesperson said in a statement Wednesday that the company is “proud of the work we've done to make insulin more affordable for all Americans with diabetes, and we stand by our record of protecting American businesses, unions and patients from rising prescription drug prices.”
A customer visits a CVS Pharmacy on February 7, 2024 in Miami, Florida.
Joe Raedle | Getty Images
An Express Scripts spokesperson said that “the prices of insulin and other medications are set by their manufacturers, who have repeatedly raised list prices.” Express Scripts works to “combat the pharmaceutical industry's high prices and lower the cost of thousands of medications for patients and their health plans, and the data shows we are successful,” they added.
The FTC declined to comment on the reported lawsuits. A spokesperson for Optum Rx did not immediately respond to a request for comment.
The FTC's investigation into insulin pricing also examines drug makers, but it's unclear whether they will be named in upcoming lawsuits, Politico reported, citing sources. Eli LillyFrench drug manufacturer Sanofi and the Danish pharmaceutical company New Nordisk control approximately 90% of the US insulin market.
PBMs are at the center of the drug supply chain in the U.S. They negotiate discounts with drug manufacturers on behalf of insurers, large employers and others. They also create lists of drugs (or formularies) that are covered by insurance and reimburse pharmacies for prescriptions.
Pharmacist Thomas Jensen checks a prescription at Rock Canyon Pharmacy in Provo, Utah, on May 9, 2019.
George Frey | Reuters
On Tuesday, the FTC released a scathing interim report based on its multi-year investigation into PBMs. The report criticized the three largest PBMs for manipulating the drug supply chain to enrich themselves at the expense of smaller, independent pharmacies and American patients.
Six of the largest PBMs handled nearly 95% of prescriptions dispensed in the United States, according to the FTC report. Its investigation began in 2022.
PBMs maintain that manufacturers are responsible for high drug prices, while pharmaceutical companies say that rebates and fees charged by middlemen force them to raise list prices for products.
The Biden administration and Congress have increased pressure on PBMs, seeking to increase transparency in their operations as many Americans struggle to afford prescription drugs. On average, Americans pay two to three times more than patients in other developed countries for prescription drugs, according to a White House fact sheet.
President Joe Biden’s Inflation Reduction Act has capped insulin prices for Medicare beneficiaries at $35 a month. That policy currently does not extend to patients with private insurance.
